'As Seen on TV' Giant Telebrands Charged with Duping Consumers

Mike Derer/APTelebrands' A.J. Khubani with an Instabulb.
Following hundreds of complaints and an undercover investigation, one of the biggest names in the as seen on TV business is being sued by New Jersey for allegedly using "unconscionable commercial practices" to dupe consumers.

New Jersey-based Telebrands, whose success was propelled by the Ped Egg, was accused by the New Jersey Division of Consumer Affairs and the state attorney general of violating the state's Consumer Fraud Act and engaging in the shifty tactics that has given the industry a bad name. Telebrands, on its websites and through its automated phone ordering system, "aggressively" upsells consumers and doesn't give them a way out of its intense ordering process, sends them items they didn't order, and uses advertisements that mislead customers, the complaint alleges.

Consumer Affairs said that it had fielded 340 complaints about Telebrands' practices between 2012 and last month. In settling a complaint with the state more than a decade ago, the company promised it would abide by New Jersey's business conduct rules or risk greater penalties.

"As demonstrated by its alleged actions, Telebrands cannot be trusted to do right by its customers or to even honor its own 2001 pledge to follow our consumer protection laws," acting N.J. Attorney General John J. Hoffman said in a statement about the five-count complaint. "We are bringing this action to end the abusive business practices that Telebrands allegedly is inflicting upon consumers."

Live Operators Hard to Reach

Consumer Affairs investigators bought several Telebrands products -- including the Instabulb, the Olde Brooklyn Lantern and the Pocket Hose -- to test the company's purchasing system, advertising claims and return process. Most calls, Consumer Affairs said, are routed to the company's automated system, which continually offers more products and keeps customers locked into calls that can continue for more than 30 minutes. One investigator was offered seven more products when trying to buy an Instabulb. And purchasers can't speak to a real person during theses calls, find out about cancellation or return policies, or even know for sure what they've ordered.

Because Telebrands doesn't make it clear, either online or on the phone, what has been added to a customer's order, consumers can end up buying far more than they intended or thought they had, state officials said.

"This action against Telebrands alleges that consumers were repeatedly pressured through gimmickry, misrepresentations, and high-pressure sales tactics to buy products they didn't want," Steve C. Lee, acting Consumer Affairs director, said in a statement. "What's just as unconscionable is that when consumers attempted to return unwanted products and obtain refunds, they allegedly couldn't reach actual customer service representatives and were subjected to return policies that differed from what was represented in ads and on the company's website."

The state wants restitution for consumers, penalties against Telebrands, and compensation for the cost of its investigation.

"Consumer satisfaction is always our top priority," Telebrands founder and President A.J. Khubani said in a statement. "We are confident that this matter with the state of New Jersey will be resolved in short order."